Airports Show Their Colors

Cover Story Airports Show Their Colors While some airports in Europe prefer simply to oversee their ground service providers, others adopt a dual role as airport operator and ground service provider. Richard Rowe looks at how three major European...


Cover Story

Airports Show Their Colors

While some airports in Europe prefer simply to oversee their ground service providers, others adopt a dual role as airport operator and ground service provider. Richard Rowe looks at how three major European airports tackle the subject of ground handling.

By Michelle Garetson/p>

By Richard Rowe

April 2002

Much of Europe may now have its own currency, but this latest step towards uniformity has done little to iron out some of the wrinkles of history, at least in aviation. On the ground, traditional structures, ongoing deregulation, and different management models all ensure that Europe's airports adopt a variety of approaches to ground handling. Depending on factors such as size, ownership, and history; European airports run the gamut from regarding ground handling as something to be avoided to an important activity that demands proactive management. A handful of airports even see it as a function best performed by the airport itself.

IMPACT OF EC DIRECTIVE ON GROUND HANDLING
Ground handling in Europe is now talked about in relation to the 1996 European Commission (EC) Directive No. 96/67, which called for the liberalization of ground handling markets at European Community airports. Although, as its critics say, conceived erratically and implemented slowly, the Directive has now opened up a market that was largely monopolized by airports and/or national flag carriers.

For some airports, it brought greater competition to already liberalized markets; while for others, it resulted not only in a rethink of services in the light of competition, but also a reconsideration of what competition meant in terms of overall airport security, safety, and service quality.

This is not to overestimate the impact of the Directive. Airports that had previously provided ground services did not suddenly throw in the towel at the first whiff of competition. Similarly, airports that had always stayed clear of such activity didn't suddenly strip off and dive in. For most, the Directive simply solidified a course of action already taken.

Detailed discussions of the EC Directive can be found elsewhere, but one immediate result was a dramatic drop in handling prices. Sniffing an opportunity, some airlines used eager new participants in freshly opened markets as an excuse to hammer down prices.

This is of great concern to Gérard Borel, General Counsel of the airport body, ACI Europe, who feels that reductions in price have seen a parallel reduction in quality, with potential airport-wide repercussions.

"Delays at check-in, or for embarking on buses, could have consequences for actual take off or transfer operations," says Borel. "It should be possible for the airport authority in charge of overall management to have a real, but neutral, control of the different operations — especially relating to service quality. This is very difficult under the current regulatory framework."

MILLSTONE OR REVENUE STREAM?
The decision whether to work with ground handlers or to become one of them can be as applicable to airports as airlines. The question is whether ground handling is part of the core business of an airport company or whether it should be farmed out to third-party service providers. Is ground handling a potential millstone or a potential revenue stream?

Airports such as London Heathrow, one of seven UK airports run privately by BAA, choose to oversee and proactively manage rather than participate in ground handling. Heathrow sees more than 63 million passengers a year and is home to one of the world's most physically constrained yet highly liberalized environments. Terminal 3, with its 16 million passengers a year, has eight handlers alone, while the airport overall has 13 handlers.

Heathrow's goal is to maximize capacity but knows it can only do so by working closely with its airside community. EC Directive rules state that an airport cannot itself limit the number of handlers, but member states and airports can impose specific rules of conduct.

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